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UKT: Half UK's Blue chips threaten tax exodus

Half of FTSE’s top 30 firms have studied shifting their tax base offshore, with a some saying they are actively considering a move

From The Sunday Times
February 14, 2010

Dominic O’Connell 37 Comments
Recommend? (8) HALF of Britain’s 30 largest companies have studied shifting their tax base offshore, with a handful saying they are actively considering a move, a survey by The Sunday Times has found.

The findings underline the threat of an exodus that could cost the state billions of pounds. They come a week before a crucial meeting at the Treasury where reforms to the taxation of foreign profits — a bone of contention for multinationals based here — will be thrashed out.

Of the top 30 companies in the FTSE 100 index, 15 said they were keeping their tax domicile status under review. Three — speaking on condition of anonymity — said they were actively considering a move. Some, such as Xstrata, the mining group, are already offshore, while others, like BAE Systems, the defence contractor, are unlikely to move because of their involvement in large government contracts.

London-listed groups have already started to move, with WPP, the advertising group, Shire, a pharmaceuticals company, and United Business Media, a publisher and events organiser, all shifting their tax base to Dublin. Last week Unilever and Diageo, two of the largest consumer-products groups said they could move if tax and red tape were not cut.

“It is a fact of life that companies are regularly evaluating where they are headquartered,” said Chris Sanger at Ernst & Young, the accountancy firm. “They are asking why are we where we are, and balancing the risks and costs of moving with the savings to be made.”

Last year’s departures were sparked by a row over HM Revenue & Customs’ plans to extend the tax net to catch more income earned overseas. The new rules would have caught income earned from intellectual property — brands, designs or patents — held offshore, a crucial issue for multinationals in Britain.

Late last month, however, the government proposed a new set of changes, which experts say could address many of the concerns. “It is definitely a helpful step, but we need to know much more about the detail,” said Andrew Roycroft at Norton Rose, the City law firm.

Revenue officials will meet lawyers, accountants and company representatives on February 23. “You can view the changes as a glass half empty or half full. If the good parts are developed, it may well attract companies to the UK,” said Sanger.

Some fear, however, that the exodus could continue regardless. Executives spoken to by The Sunday Times said high rates of personal taxation — in particular the 50% top tax rate that takes effect from April, the £30,000 levy on non-domiciled individuals and the reduction in pension tax relief for those earning more than £150,000 — were pushing people and companies to go.

“The rate of income tax on a company’s most senior employees is now higher in Britain than in most other countries,” said Paul Smith at Grant Thornton, the accountancy firm.

http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article7026265.ece

37 Comments

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j al wrote:
As much as i hate to say it i think we are barking up the wrong tree.Why is the 50% tax rate so hotly contested is it they are greedy or perhaps just maybe the destruction of patriotism is partly to blame.we must also look where the money goes the work shy government pet projects which serve no purpose our waste is out of control.It is destroying our country we need to start pointing our finger in the right direction and we could start with those clowns brown cameron and clegg.Britain needs to be saved not left to this greedy camera happy bunch whos next to cry on TV?.
February 14, 2010 11:16 PM GMT on community.timesonline.co.uk Recommend? Report Abuse
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Des Pollock wrote:
Why should these companies that earn £billions be expected to make a contributon to the economy of the country they call home? Doesn't the government realise the rules for the rich are not the same as those for everyone else? Greed is good....
February 14, 2010 9:02 PM GMT on community.timesonline.co.uk Recommend? (1) Report Abuse
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Jon Leigh wrote:
Yet more proof that the Politics of jealousy (i.e. Socialism) doesn't work in the real world.
February 14, 2010 7:56 PM GMT on community.timesonline.co.uk Recommend? (5) Report Abuse
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Y C wrote:
I'm no fan of labour's policies but to all that think the grass is greener somewhere else and all you have to do is emigrate to improve your life, the reality is not always that simple. Many people who have gone down that route have regretted it after finding out that foreign governments can actually be worse than Labour.
Back in the days of Empire, emigrating was usually a good move (if you didn’t die prematurely of local diseases) as the cards were stacked in our favour. However, these days’ émigrés find that they are at best on a par with the locals but more probably below par as factors such as discrimination and poor local knowledge effect their status.

February 14, 2010 6:16 PM GMT on community.timesonline.co.uk Recommend? (5) Report Abuse
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Kia Fosdter wrote:
Lookj I have got to point this out ,if only to show how utterley incompetent Labour are. Would you believe that Labour did not know that ALL of the Trademarks they hold for their name "Labour" "Labour Party" etc etc are ALL invalid. They only realised in November 2009 when they were told !!. They were granted one of the replacements 2 days ago and rest are still only applications. As I say, all the old ones are invalid because LABOUR did not know ,or care ?, that Unincorporated Associations cannot own any property including trademarks in the name of the Association. What incompetents Labour are.
February 14, 2010 5:15 PM GMT on community.timesonline.co.uk Recommend? (4) Report Abuse
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Hormaz Dhondy wrote:
Thank you, J Gould, for your well articulated thoughts. I couldn't have put it any better.
February 14, 2010 4:26 PM GMT on community.timesonline.co.uk Recommend? (6) Report Abuse
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A Slumlord wrote:
Why should they stay and contribute towards Labour's £500bn client state?

There is little left in Britain to attract these companies, e.g.

1.High corporate taxation.

2.Little long term government investment.

3.Wage demands are high due to stealth taxation, overpaid and underemployed public sector, and of course high house prices.

4.Crumbling and insufficient infrastructure

5.Unstable currency.

6.Unprecedented levels of UK and EU red tape

7.Fear of getting clobbered by 'political correctness gone mad'.

8.Taxation of pension funds.
February 14, 2010 4:10 PM GMT on community.timesonline.co.uk Recommend? (18) Report Abuse
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james smith wrote:
if the non-working group was encouraged to help the comunity in some way, cleaning grafiti or public loos litter picking for £5 per day would that help them join the majority?
February 14, 2010 4:07 PM GMT on community.timesonline.co.uk Recommend? (3) Report Abuse
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R D wrote:
Blame the British Public! They voted 3 times for Labour and now they can suffer their anti-business policies!
February 14, 2010 3:25 PM GMT on community.timesonline.co.uk Recommend? (19) Report Abuse
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Danny Black wrote:
Arthur Stephenson, thx enjoyed the laugh...:

"The "non-working community" is just as important as any other
" - genius satire
February 14, 2010 3:23 PM GMT on community.timesonline.co.uk Recommend? (6)